Democracy Won't Cure Rising Inequality

A new study shows the link between money and political influence is even stronger than we thought.
Photographer: Daniel Acker/Bloomberg

Money buys power.

That's the bottom line of a new study from Princeton University political scientist Martin Gilens, who looked at 1,779 U.S. government policy decisions between 1981 and 2002. Gilens found that the preferences of the median earner had no impact on whether policies are adopted -- but that politicians march in lockstep with what the top earners wanted.

You may think you've heard that conclusion before, but Gilens's approach is unique, and that makes his findings all the more important. Gilens didn't take one theory of who has political influence and test it with data, as does almost all of the research on this topic. He tested the power of the rich, middle class, and interest groups simultaneously, allowing for any theory to win or lose. That is new.

And here's the real danger of what Gilens finds: It means that the U.S. political system is set to transform the dramatic rise of income inequality into entrenched differences in political power -- and there's very little the middle class can do to stop it from happening.

There is, in other words, an inequality feedback loop built into the U.S. political system -- and America may be spiraling into it. A policy that enriches what Gilens calls the "economic elite" will command its support. Their support, Gilens shows, means that the political system is likely to make it happen. And the ever wealthier become the ever-more powerful. Policies that undermine the elite become ever more difficult to pass as economic inequality buys political obedience.

Whether such a feedback loop exists has been controversial. Frederick Solt, a political scientist at the University of Iowa, has found that countries with high inequality also have low political engagement. But, as Emory University political scientist Alan Abramowitz told me, until now researchers have had surprisingly little evidence that economic inequality actually causes political inequality, especially in the U.S. Gilens's work may begin to change that.

And the power of elites to shape political outcomes may be even stronger than Gilens's results suggests. His definition of "elite" is the 90th income percentile, or a household earning $146,000 a year. It seems unlikely, however, that these households are the ones that matter. A successful doctor didn't fly the 2016 Republican presidential candidates out to Las Vegas last month; multibillionaire Sheldon Adelson did. What Gilens's results may actually mean is that even slight changes in the views of the very highest earners speak louder than overwhelming majorities of the masses.

It has been long thought that, if the economy won't reverse rising inequality on its own, American democracy would. It did in the 1930s with the help of the Great Depression and World War II. It isn't clear what could change the country's direction this seems this time. Democracy can't do it alone.

(Evan Soltas is a contributor to Bloomberg View. Follow him on Twitter at @esoltas.)

This column does not necessarily reflect the opinion of Bloomberg View's editorial board or Bloomberg LP, its owners and investors.